Is eBay Warming Up The Skype Billion-Dollar Buyout Plan?

from the round-two dept

Back in 2005, we marveled at the success that Skype backers had in talking up the price of the company, eventually suckering convincing eBay to put together a $4 billion deal for it. This was what we dubbed the "Skype Billion-Dollar Buyout Plan" in which companies used press hype to create valuations far above their actual worth (see YouTube and Facebook for a couple of examples). Of course, what eBay was never really clear on was how it planned to make money from Skype, and it later went back and forth on whether it had given up on looking for the mythical "synergies" between Skype and its core auction business. Last week, eBay's CEO conceded that those synergies were "minimal" -- leading to more speculation that eBay might spin Skype off.

And thus the cycle begins again, with a figure of $900 million to $1.2 billion tossed out there as a potential starting point for the second version of the Skype Billion-Dollar Buyout Plan. What's interesting is that just like four years ago, Skype's financials are murky, as Om Malik points out. The company also still faces the same big problem: monetization. As Skype gets bigger, that problem could become even more difficult. After all, if Skype continues to garner more and more users, more and more calls will shift from the paid SkypeOut service to free Skype-to-Skype calls. Skype is said to be profitable (although there's no indication of how profitable), but it seems pretty clear that it hasn't been the runaway success that would have justified its $4 billion price tag. While it's possible that any current sale could carry a more realistic price, somehow we imagine that eBay will try to use the same tactic that drove up its price for Skype to drive up the next buyer's price.

Reader Comments

Bogus User Count, and Support also a problem

Skype already has a major problem with Customer Support - they are already unable to support the users they have now, and if they do find a way to "monetize" more of their free users, it is certain that paying customers are going to demand reasonable support. Not having a support phone number, nor email address, nor fax, nor live chat, and taking a MINIMUM of four days to answer requests through their web page (the only means available), is absolutely unacceptable.

In addition, no one seems to be questioning the ridiculously inflated "Registered Users" numbers that Skype insists on throwing about. They nothing even remotely approaching the "330 million" users that they claim, that is simply the total number of accounts which have ever been registered since the first day Skype was released. It includes the massive number of accounts which have been created, and continue to be created every day, for the spammers and pornographers who infest Skype now, as well as all of the inactive accounts which have been abandoned, never used, or created inadvertently. The best guess at the true number of active Skype accounts is about 10% of the number that they claim - but tossing out the inflated number contributes to the hype when they are trying to sell the company.

eBay is an awful company.

They're no good. Skype is flaky and support is non-existent. They make their *paying* customers wait a good month (yes, month, no, nothing was in my spam folder) to respond to a simple question with "Have you tried looking in the forums?". Evidently they'd rather their customers support each other (for free).

Why are we even talking about Skype? eBay has made it quite clear time and time again that they will not sell Skype! What would be the point in selling Skype at this point in the game? eBay's auction business went down the toilet a long time ago and will never return! Selling Skype is not going to save eBay from self-destruction. Just my opinion.

ebay, skype and Wrap

I found a neat story that I linked to under "URL". Imagine the value of eBay sellers (and Skype users?) as far as branding and increased sales/visits using this system from http://www.wrapmaillite.com - I'm signing up - nobrainer!

Skype Class Action In Washington and 2nd Class Action Brewing in CA.

Skype has a policy where customers "credits" expire after 180 days of non usage of their Skype account. Already a class law suit has been filed against the company in the state of Washington. It is illegal to lay claim on consumer funds that don't belong to you.
There's also one brewing up in California: